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Exam IIA-CIA-Part3 topic 1 question 18 discussion

Actual exam question from IIA's IIA-CIA-Part3
Question #: 18
Topic #: 1
[All IIA-CIA-Part3 Questions]

The economic order quantity for inventory is higher for an organization that has:

  • A. Lower annual unit sales.
  • B. Higher fixed inventory ordering costs.
  • C. Higher annual carrying costs as a percentage of inventory value.
  • D. A higher purchase price per unit of inventory.
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Suggested Answer: B 🗳️
by mbappah at Jan. 16, 2021, 11:41 a.m.

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John1237
8 months ago
It is about the economic order quantity and not the economy to be realized. If the inventory order is fixed (not reduced) and the cost is higher, then the numerator of the EOQ ratio increases.
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Shuchun_37
1 year, 6 months ago
So why is not D
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mbappah
2 years, 3 months ago
it's economical to buy more if the ordering cost is high. imagine situations where delivery fixed cost very high.
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